He explains how Apple's success goes against four apparent "laws"
of business.

The law of large numbers. As companies get
larger, their growth rate naturally decreases -- there are only
so many potential customers in the world, and they can only
spend so much money. But Apple now seems to be bucking that
trend: although it grew revenue only 7% for the entire year,
revenue during the quarter was $74.5 billion, up 30% from a
year ago, and it's guiding 20% growth next quarter. If it keeps
going at this pace, it will have added an additional $37 to $40
billion in sales by the end of the year, which is about half of
the annual sales of Google or
Microsoft.

The law of commoditization. This law
says that eventually all products in a particular category
become more or less the same, and people stop paying premium
prices for a particular brand, creating a "race to the bottom"
in pricing. A year ago, this seemed to be happening to Apple in
smartphones. But Apple refused to cut prices, and the iPhone 6
and 6 Plus, with their larger screens, reversed that trend. Not
only is Apple's market share growing, but its average price per
sale was $50 higher than it was a year ago. And most
of the people switching to Apple phones are coming from cheaper
Android devices.

The law of market share. In technology,
platform market share tends to reinforce itself: developers
create more apps for the highest-selling platform, which makes
it more attractive to customers, which in turn draws more
developers, until you end up with a virtual monopoly and a
bunch of bit players. By this law, developers should be
favoring Android phones, as Android now has 80% market share.
But they're not. Google's store may have
more apps than Apple's, but the iPhone still has the apps
people want, and developers still often build for it first
because Apple customers tend to spend more money.

The law of modularity. This law says that
products win when they're made up of a bunch of different
interchangeable components, instead of being controlled
end-to-end by one company. The competition for each component
lowers prices and improves quality more quickly than a single
company can do it. The end result? The componentized products
are both better and cheaper than the integrated product. But
Apple has stubbornly resisted modularity — first in the Mac,
then in the iPod, and now with the iPhone and iPad — and its
sales continue to grow.

Gassée acknowledges that the law of large numbers will
eventually catch up with Apple.

But what about the other three? How is Apple able to break
them?

Gassée suggests that they actually aren't laws at all, but
"convenient wishful thinking" with "no substance."

But there may be another lesson
here. Laws 2, 3,
and 4 were all seen during the PC era. But maybe the PC era was
an exception in the tech business, rather than the rule.

Microsoft went to great pains to ensure that its operating
systems worked with a lot of different hardware components
(although Intel usually provided the microprocessors). This
modularity led to commoditization and massive market share.
Apple, and the non-commoditized Mac, suffered.

Microsoft also did a lot to make it easy for developers to
write software for its platforms, rather than hoarding the entire
software market for itself.

These weren't random choices. They were strategic decisions
because Microsoft wasn't interested in hardware, but wanted
Windows to run as many places as possible. A massive-scale
software business has beautiful economics — you can cover your
cost of development very quickly, and after you do that, each
additional sale is pure profit. This is how Microsoft was able to
enjoy 80%+ margins on Windows for years.

But before Microsoft rose, there were plenty of successful
computing companies that made integrated systems. For years, IBM
(and its smaller competitors) sold special-purpose computing
machines, and even when IBM introduced its more standardized
mainframe, it sold the hardware and gave the software away for
free. (IBM eventually unbundled software in the late 1960s under
the threat of antitrust.)

When looking at Apple versus Android, a lot people think
only of the last 20 years of the tech industry because that's the
only period most of us lived through.

But Google is not Microsoft, and Android is definitely not
Windows. Google gives Android away for free and lets anybody do
whatever they want with it. It's mainly a defensive measure to
make sure Google's real business, online advertising, didn't get
squeezed by the move to mobile.

Apple, on the other hand, is still Apple. But the
smartphone business, so far, is turning out to be a lot better
fit for the integrated approach than the PC business
was.